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THE
MINISTRY OF FINANCE
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SOCIALIST
REPUBLIC OF VIET NAM
Independence - Freedom - Happiness
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No:
95/2006/TT-BTC
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Hanoi,
October 12, 2006
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CIRCULAR
AMENDING AND SUPPLEMENTING
THE FINANCE MINISTRY'S CIRCULAR NO. 126/2004/TT-BTC OF DECEMBER 24, 2004, WHICH
GUIDES THE IMPLEMENTATION OF THE GOVERNMENT'S DECREE NO. 187/2004/ND-CP OF
NOVEMBER 16, 2004, ON CONVERSION OF STATE COMPANIES INTO JOINT STOCK COMPANIES
In order to solve problems in the course of
implementation of the Finance Ministry's Circular No. 126/2004/TT-BTC of
December 24, 2004, which guides the implementation of the Government's Decree
No. 187/2004/ND-CP on conversion of state companies into joint stock companies
(referred to as Circular No. 126/2004/TT-BTC for short) and to guide the
implementation of Article 6 of the Government's Decree No. 17/2006/ND-CP of
January 27, 2006, amending and supplementing a number of articles of the
Decrees guiding the implementation of the Land Law, the Ministry of Finance
amends and supplements a number of points of Circular No. 126/2004/TT-BTC as
follows:
1. To amend and supplement Point 2.2, Section
B, Part II of Circular No. 126/2004/TT-BTC as follows:
"2.2. When obtaining the decision
publicizing its value, the enterprise shall:
a/ Adjust the accounting book and the balance
sheet based on that decision.
b/ Preserve and hand over its debts and assets
(enclosed with relevant records) which have been excluded from its value to the
Company Purchasing and Selling Outstanding Debts and Assets of Enterprises
within 60 days after the publicization of its value.
c/ Fully account arising expenses related to the
equitization.
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- When the enterprise has made a financial
statement according to the reporting period, it shall not adjust the
depreciation level based on the new historical cost.
- When the enterprise has not yet made a
financial statement, it shall adjust the depreciation level based on the new
historical cost from the time of its valuation.
e/ If the period from the time the investor pays
money for the purchase of shares to the time the company is granted a business
registration certificate is longer than 3 months, the enterprise may calculate
and pay interests on the paid money to the investors on the following
principles:
- Interests on the total par value of the
purchased shares shall be paid only from the fourth month on.
- The interest rate must not exceed the interest
rate of short-term loans of the same term, set by commercial banks at the time
of interest calculation.
- The payment of interests must not cause losses
to the enterprise.
The enterprise may account these paid interests
as its business expense.
f/ The distribution of profits generated from
the time of enterprise valuation to the time of official conversion into a
joint stock company shall comply with the current provisions of law on state
companies."
2. To amend and supplement Point 2.3, Section
B, Part II of Circular No. 126/2004/TT-BTC as follows:
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a/ Within 30 days after being officially
converted into a joint stock company, the enterprise shall make a financial
statement by the time it is granted the business registration certificate and
send it to the units as stipulated in the accounting regime.
Within 30 days after receiving the financial
statement, the agency competent to decide on the enterprise value shall inspect
and handle financial matters arising between the two points of time; re-value
the state capital portion and decide on the adjustment of the state capital in
the enterprise; organize the hand-over between the enterprise and the joint
stock company; and send the result of re-valuation of the state capital portion
to the Ministry of Finance.
b/ The director and the chief accountant of the
state company shall make and sign the financial statement, the report on
valuation of the state capital portion at the time of conversion into the joint
stock company, and the report on finalization of equitization expenses and
taxes, and take responsibility for the truthfulness and accuracy of those
reports.
The management board of the (new) joint stock
company shall create conditions for leaders of the (former) state company to
fulfill their tasks. The director or chief accountant of the state company who
has not yet completed the financial statement may not move to another company
or cease working according to regulations.
c/ If the enterprise is valuated in a year while
it is officially converted into a joint stock company in the subsequent year,
only one financial statement for the whole period, rather than two separate
statements by December 31 of the previous year and by the time of official
conversion, shall be made."
3. To amend and supplement Point 6, Section
A, Part III of Circular No. 126/2004/TT-BTC as follows:
"6. Land use rights value
The determination of the land use rights value
for inclusion into the enterprise value shall comply with Clauses 1 and 2,
Article 19 of Decree No. 187/2004/ND-CP, specifically:
6.1. When the enterprise applies the form of
renting land:
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b/ If the land has been allocated and the land
use levy has been remitted into the state budget, or the land use rights have been
purchased by the enterprise from other individuals or legal persons, and the
enterprise now shifts to rent land, only the expenses that increase the land
use value and the value of landed assets, such as compensation, ground
clearance and ground filling-up expenses, shall be included in the enterprise
value.
The enterprise shall carry out the procedures
for shifting from the form of land allocation to the form of land renting
before its official conversion into a joint stock company.
6.2. When the enterprise applies the form of
land allocation with payment of land use levy, the land use right value for
enterprise valuation shall be determined as follows:
a/ For the land area which is being rented by,
and now is allocated to, the enterprise: After the equitization decision is
issued, the enterprise shall, simultaneously with the inventory, classification
and re-valuation of assets, determine under Article 6 of the Government's
Decree No. 17/2006/ND-CP of January 27, 2006, the land use rights value to be remitted
into the state budget at the time of valuation and report it to the People's
Committee of the province or centrally run city where exists the enterprise's
allocated land area for consideration and decision.
Within 30 days after receiving the enterprise's
report, the provincial/municipal People's Committee shall decide on the
specific land price and notify the enterprise of that price. Past that time
limit, if the provincial/municipal People's Committee gives no comment, it
shall be regarded as having agreed with the enterprise's plan on determination
of the land price. If the equitized enterprise disagrees with the land price
re-determined by the provincial/municipal People's Committee, it may continue
renting land for the equitization.
The land use rights value determined on the
above principles shall be included in the enterprise value and accounted as a
state budget remittance but not as an increase in the state capital portion in
the enterprise.
The order and procedures for allocation of land,
payment of land use levy and grant of land use rights certificates shall comply
with the provisions of the Land Law and its guiding documents.
b/ If the enterprise is allocated land for
construction of houses or infrastructure facilities for transfer or lease and
has remitted the land use levy into the state budget:
- The enterprise shall re-determine the land use
rights value at the price set by the provincial/municipal People's Committee at
the time of valuation, which must not be lower than the actual land use rights
expense reflected in the accounting book. If the re-determined land use rights
value is higher the actual land use right expense reflected in the accounting
book, the difference shall be included in the actual value of the state capital
portion in the enterprise.
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c/ If the equitized enterprise is allocated land
for construction of dwelling houses or infrastructure facilities for transfer
or lease and uses part of the land area for building public-utility works to be
handed over to the locality for management or use, the land use rights value to
be included in the value of the equitized enterprise shall be determined as
follows:
- If the hand-over is made with payment, only
the land use rights value of the land area which has been allocated to the
enterprise for commercial operation of houses or infrastructure facilities
shall be re-determined for inclusion in the value of the equitized enterprise.
- If the hand-over is made without payment, the
whole value of the right to use the allocated land area shall be included in
the enterprise value after subtracting the expenses for construction of the
handed-over public-utility works.
d/ If the equitized enterprise is allocated land
for construction of dwelling houses or infrastructure facilities for transfer
or lease and it has regulated the house and land fund under the mechanism
provided by the provincial/municipal People's Committee, the land use rights
value included in the enterprise value shall be the re-determined land use
rights value minus the regulated income.
e/ If the equitized enterprise is allocated land
for construction of houses or infrastructure facilities for transfer or lease
and transfers part of the area of high-rises to other agencies for use as
working offices or for business activities, the re-determined land use rights
value must be distributed to the transferred house area based on the
co-efficients of house stories or the house selling price applicable to each
story. Those co-efficients are set by provincial/municipal People's Committees
in accordance with state current regulations.
f/ If the equitized enterprise which is
allocated land for construction of dwelling houses for sale has sold the
houses, it shall not re-valuate the sold house area corresponding to the
proceeds from house sale which have been accounted as incomes, for determining
annual business results and paying taxes according to state regulations."
4. To amend and supplement Point 1.2, Section
A, Part V of Circular No. 126/2004/TT-BTC as follows:
"1.2. Strategic investors defined in Clause
2, Article 26 of Decree No. 187/2004/ND-CP shall be approved by the
equitization-deciding agency. Laborers in the equitized enterprise and legal
persons in the same corporation shall not be regarded as strategic
investors."
5. To add following Point 1.4 to Section A,
Part V of Circular No. 126/2004/TT-BTC:
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6. To amend and supplement Point 2.2, Section
A, Part V of Circular No. 126/2004/TT-BTC as follows:
"2.2. The number of preferred shares to be
sold is specified as follows:
a/ One hundred shares at most shall be sold to
each laborer in the enterprise for every working year in the state sector at a
price which is 40% lower than the actual average auction-winning price.
b/ Twenty per cent of the sold shares at most
shall be sold to strategic investors at a price which is 20% lower than the
actual average auction-winning price.
c/ The total discount value of preferred shares
sold to laborers and strategic investors (determined based on the par value of
shares) must not exceed the state capital portion in the enterprise after
subtracting the value of shares held by the State and equitization expenses
according to set norms."
7. To amend and supplement Point 2.3, Section
A, Part V of Circular No. 126/2004/TT-BTC as follows:
"2.3. The number of shares which are
publicly auctioned to investors (including both strategic investors and
laborers if they purchase more shares) must be at least 20% of the charter capital.
If that number is below 20% of the charter capital, the following handling
measures shall be taken:
a/ Reducing the enterprise's shares held by the
State if the enterprise dose not have its dominant shares held by the State.
b/ Reducing the number of preferred shares sold
to strategic investors; if that number is still below 20%, reducing the number
of preferred shares sold to laborers."
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"2.5. For equitized enterprises which are
eligible for listing and registering transactions in the securities market,
their share sale plans must meet the conditions on the number of shareholders
for listing or registering transactions in the securities market."
9. To amend and supplement Point 1.4, Section
B, Part V of Circular No. 126/2004/TT-BTC as follows:
"1.4. For enterprises in deep-lying or
remote areas which plan to publicly auction shares valued at between over VND 1
billion and VND 10 billion and have publicly announced its intention to hire
share-auctioning organizations but no intermediary financial institution
accepts to auction shares of those enterprises, the Steering Committee for
Enterprise Equitization shall itself hold the auction."
10. To amend and supplement Item d, Point
2.2, Section B, Part V of Circular No. 126/2004/TT-BTC as follows:
"d/ To supply information on the equitized
enterprise (as stipulated in Appendix No. 7 to Circular No. 126/2004/TT-BTC),
the equitization plan, the draft organization and operation charter of the
joint stock company; the form of application for auction participation
registration; and relevant information on auction (made according to Appendix
No. 9 to Circular No. 126/2004/TT-BTC) to investors and investment promotion
organizations."
11. To amend and supplement Point 6, Section
B, Part V of Circular No. 126/2004/TT-BTC as follows:
"6. Handling of unsold shares:
6.1. When the auctioned shares cannot be sold
out, the Steering Committee for Enterprise Equitization shall report such to
the equitization-deciding agency for handling in the following direction:
a/ If the number of unsold shares represents
less than 50% of the auctioned shares, to adjust the charter capital or the
ratio of capital held by the State for conversion of the enterprise into a
joint stock company.
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6.2. If the bid-winning investor refuses to buy
or fails to buy up the shares he/she is entitled to buy based on the auctioning
results, he/she may not receive back the deposit in proportion to the number of
shares he/she refuses to buy. The Steering Committee for Enterprise
Equitization shall consider and handle the number of shares the bid-winning
investor refuses to buy as follows:
a/ If the number of shares the bid-winning
investor refuses to buy represents less than 30% of the total auctioned shares,
those shares shall be further sold to auction-participating investors by mode
of agreement. The selling prices shall come from high to low but must not be
lower than the average auction-winning price (including also the auctioning
price offered by the investor that refuses to buy shares).
After the agreement-based sale, if the shares
planned for sale have still not been sold out, the Steering Committee for
Enterprise Equitization shall report such to the equitization-deciding agency
for handling in accordance with Item a, Point 6.1 above.
b/ If the number of shares the bid-winning
investor refuses to buy represents 30% or more of the total auctioned shares,
the refused shares shall be further auctioned.
If the refused shares are auctioned but cannot
be sold out, the Steering Committee for Enterprise Equitization shall report
such to the equitization-deciding agency for handling in accordance with Item
a, Point 6.1 above.
6.3. If laborers and strategic investors fail to
buy up all the preferred shares, the Steering Committee for Enterprise
Equitization shall report such to the equitization-deciding agency to decide on
adjustment of the charter capital or the ratio of capital held by the State for
conversion of the enterprise into a joint stock company.
6.4. The actual average auction-winning price
used as a basis for determination of the preferential selling price of shares
for laborers and strategic shareholders shall be calculated based on the price
and number of shares actually purchased by investors (including the results of
agreement-based sale and additional auction, if any).
12. To amend and supplement Point 8, Section
B, Part V of Circular No. 126/2004/TT-BTC as follows:
"8. The expense for auction of shares shall
be decided by the equitization-deciding agency and determined as follows:
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b/ If the auction is conducted by intermediary
financial institutions, that expense must not exceed 15% of the total
equitization expenses (including expenses for at least 2 seminars on investment
opportunities and introduction of the equitized enterprise to investors).
c/ If the auction is conducted at a securities
trading center, that expense must not exceed 20% of the total equitization
expenses. The expense distribution between the center and the intermediary
financial institutions shall be agreed by the parties."
13. To add following paragraph to the end of
Point 1.3, Part VI of Circular No. 126/2004/TT-BTC as follows:
"After completing the sale of shares of an
independent state company under a ministry, ministerial-level agency,
government-attached agency or provincial/municipal People's Committee, the
share-auctioning agency shall immediately remit the proceeds from the sale of
shares belonging to the state capital and the positive difference from share
auction to the Enterprise Reorganization Support Fund at the Finance Ministry
(but not to enterprises) at the following address:
The money-receiving unit: the Enterprise Finance
Department - the Finance Ministry.
Account number: 942.01.00.00000
At: the State Treasury's Transaction Bureau.
After finishing the equitization process, the
enterprise shall determine the exact payable amount, finalize expenses paid to
laborers and equitization expenses and report them to the equitization-deciding
agency. If the payable amount is larger than the paid amount, the enterprise
shall pay the deficit to the Fund. If the payable amount is smaller than the
paid amount, the enterprise shall notify such to the Fund for getting the
difference refunded.
Ministries, ministerial-level agencies or
government-attached agencies (for centrally run enterprises) or provincial/municipal
People's Committees (for enterprises under provinces or centrally run cities)
shall direct and urge the payment of proceeds from share sale to the Enterprise
Reorganization Support Fund at the Finance Ministry."
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"2.4. Responsibilities of valuating
organizations:
To be answerable for the enterprise valuation
results. If those results are not compliant with state regulations, the Steering
Committee for Enterprise Equitization may refuse to pay for the valuation
services and those valuating organizations shall be considered for exclusion
from the list of qualified valuating organizations.
2.5. Responsibilities of auctioning agencies:
To be responsible for the information on the
enterprise which is publicized before the auction. That information must be
approved by the Steering Committee for Enterprise Equitization before being
notified to investors.
If the information is inaccurate, distorting the
actual situation of the enterprise and causing state capital loss or damage to
investors, the auctioning agency shall be wholly responsible for paying
compensations for such loss on damage.
2.6. Responsibilities of agencies involved in
tax finalization for equitized enterprises are specified as follows:
a/ Time of valuation of enterprises:
- The enterprise shall make and send a tax
finalization report by the time of enterprise valuation to the tax office
according to regulations. The provincial/municipal Tax Department shall
promptly assign its officers to make tax finalization for the enterprise in
accordance with the announced time of enterprise valuation.
- If, by the time of enterprise valuation, the
tax finalization inspection has not yet been completed, the enterprise may use
the financial statement for enterprise valuation (including the determination
of the enterprise's obligations related to tax and profit distribution). After
the tax finalization is made, the differences (if any) in the enterprise's tax
obligations towards the State shall be adjusted when the enterprise is granted
the business registration certificate and is officially converted into a joint
stock company.
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- The enterprise shall make and send a tax
finalization report for the period from the time of its valuation to the time
of its official conversion into a joint stock company to the tax office
according to current provisions of law right after being granted the business
registration certificate. Within 10 days after receiving the complete dossier,
the tax office shall complete the inspection of the enterprise's tax
finalization.
- When the enterprise has submitted a complete
dossier but the tax office fails to inspect its tax finalization within the set
time limit, the equitization-deciding agency shall issue a decision approving
the tax finalization, and transfer capital and assets to the joint stock
company. The joint stock company shall not be answerable for the tax amount
increased against that written in the financial statement which has been
approved and transferred by the competent agency."
This Circular takes effect 15 days after its
publication in "CONG BAO."
Any problems arising in the course of
implementation should be reported to the Finance Ministry for study and
solution.